Problem 1 Comprehensive Stockholders' Equity Transactions and Stockholders' Equity

Kraft Unlimited, Inc., was organized and authorized to issue 5,000 shares of $100 par value, 9 percent preferred stock and 50,000 shares of no par, $5 stated value common stock on July 1, 2014. Stock-related transactions for Kraft Unlimited follow.

July 1 Issued 10,000 shares of common stock at $11 per share. 1 Issued 500 shares of common stock at $11 per share for services rendered in connection with the organization of the company. 2 Issued 1,000 shares of preferred stock at par value for cash. 10 Issued 2,500 shares of common stock for land on which the asking price was $35,000. Market value of the stock was $12. Management wishes to record the land at the market value of the stock. Aug. 2 Purchased 1,500 shares of its common stock at $13 per share. 10 Declared a cash dividend for one month on the outstanding preferred stock and $0.02 per share on common stock outstanding, payable on August 22 to stockholders of record on August 12. 12 Date of record for cash dividends. 22 Paid cash dividends.

1. Prepare journal entries to record these transactions. If no entry is required in a dropdown, select "No entry required", and leave the amount box blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

July 1

July 1

July 2

July 10

Aug. 2

Aug. 10

Aug. 12

Aug. 22

2. Prepare the stockholders equity section of Kraft's balance sheet as it would appear on August 31, 2014. Net income for July was zero and August was $11,500.

Kraft Unlimited, Inc.

Balance Sheet (Stockholders' Equity)

August 31, 2014

Contributed capital:

$

$

Total contributed capital

$

Total contributed capital and retained earnings

$

Total stockholders' equity

$

3. Calculate dividend yield, price/earnings ratio, and return on equity. Assume earnings per common share are $1.00 and market price per common share is $20. For beginning stockholders' equity, use the balance after the July transactions. If required, round your answers to one decimal place.

Dividend yield % Price/Earnings ratio times Return on equity % Problem 2

Panza Corporation has 60,000 shares of its $1 par value common stock outstanding.

July	17	Declared a 10 percent stock dividend on common stock to be distributed on August 10 to stockholders of record on July 31. Market value of the stock was $5 per share on this date.
	31	Date of record.
Aug.	10	Distributed the stock dividend declared on July 17.
Sept.	1	Declared a $0.50 per share cash dividend on common stock to be paid on September 16 to stockholders of record on September 10.

Prepare journal entries to record the above transactions as they relate to the company's common stock:

If no entry is required, select "No entry required" and leave the amount boxes blank.

For a compound transaction, if an amount box does not require an entry, leave it blank.

July 17
July 31
Aug. 10
Sept. 1